Analyzing Asian American Medical Group Limited’s (ASX:AJJ) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess AJJ’s recent performance announced on 31 August 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for Asian American Medical Group
How Did AJJ’s Recent Performance Stack Up Against Its Past?
I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to assess different stocks on a similar basis, using new information. For Asian American Medical Group, the most recent bottom-line -SGD3.1M, which, relative to the prior year’s figure, has become more negative. Given that these values are somewhat short-term thinking, I have calculated an annualized five-year figure for Asian American Medical Group’s earnings, which stands at -SGD0.2M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further analyze Asian American Medical Group’s loss by looking at what’s going on in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -5.53%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the Australian healthcare industry has been growing, albeit, at a subdued single-digit rate of 7.70% in the past year, and a substantial 12.54% over the past couple of years. This suggests that whatever tailwind the industry is profiting from, Asian American Medical Group has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Asian American Medical Group may be facing and whether management guidance has regularly been met in the past. You should continue to research Asian American Medical Group to get a better picture of the stock by looking at:
1. Financial Health: Is AJJ’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.